Lexmark Employees Seek to Block Apex Acquisition, Citing Chinese-Hacking Concerns

Long History of Uneasy U.S.-Chinese Relations

How real is the threat of Chinese hacking of Lexmark MFPs if Lexmark is acquired by Apex Technology? That’s not easy to answer, but we can state that relations between the United States and China have been uneasy for decades, and that Chinese hacking of U.S. government agencies has occurred.

A brief look at U.S.-Chinese relations may be helpful. The communist-government People’s Republic of China is currently a U.S. trading partner, as U.S. President Nixon normalized relations with China in 1972. However, relations between China and the United States are best characterized as somewhat uneasy. China has backed two U.S. adversaries, North Vietnam and North Korea. In 1966, China provided economic and military aid to the North Vietnam, with which the United States was at war with, and, according to the U.S. Council on Foreign Relations, “China is North Korea’s most important ally, biggest trading partner, and main source of food, arms, and energy.” While the United States has normalized relations with Vietnam, North Korea remains a staunch U.S. adversary.

As for Chinese government hacking of U.S. computing networks, there has been a long history of Chinese hacking and Chinese denial of hacking. Last year, for instance, the Washington Post reported that Chinese hackers breached the U.S. Office of Personnel Management’s security-clearance computer system in 2014, “giving Chinese government intruders access to sensitive data.”  In March 2015, the Washington Post also reported that a Chinese businessman pleaded guilty in federal court to helping two Chinese military hackers carry out a “damaging series of thefts of sensitive military secrets from U.S. contractors.”

U.S. national security advisers have repeatedly warned China to end hacking, but in an interview with The Wall Street Journal last fall, Chinese President Xi Jinping denied that the Chinese government is sponsoring the hacking, stating “The Chinese government does not engage in theft of commercial secrets in any form, nor does it encourage or support Chinese companies to engage in such practices in any way.” However, some analysts argue that that statement was only carefully worded, and that while the government may not support hacking, the term “government” may not also include the Chinese military.

As for the possibility that other smart MFPs may be used for hacking and could endanger U.S. national security, those other MFPs are either made by American companies (Xerox and Hewlett-Packard), or by companies in Japan (Canon, Konica Minolta, Ricoh), or by Samsung in South Korea, and both Japan and South Korea are long-time trusted U.S. allies. Interestingly, Sharp Corporation, which also markets smart MFPs, was recently acquired by Foxconn Technology Group, otherwise known as Hon Hai Precision Industry Company of Taiwan, otherwise known as the Republic of Taiwan. But Taiwan isn’t governed by the People’s Republic of China, and the United States is one of Taiwan’s main allies.

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